The business behind the show

Star Wars: The Old Republic snags 1.7 million subscribers

February 1, 2012 | 4:48
pm

Star Wars: The Old Republic, an ambitious and costly online game, has sold 2 million copies since the title launched in mid-December and amassed 1.7 million "active subscribers," according to the game's publisher, Electronic Arts Inc.

The subscriber figure includes players who are still within their 30-day free trial period and haven't yet started to pay the $15-a-month subscription fee but have entered their credit card information and authorized EA to begin charging them when their trial period ends.

The early performance suggests that the game, which cost an estimated $200 million to make and took more than five years to develop, is at least off to a healthy start, said Michael Pachter, an analyst with Wedbush Securities.

"The numbers are very good," said Pachter, who estimates that at least 1.2 million of the active subscribers have already started to pay the monthly fees.

EA has said that the game approaches break-even with just 500,000 paying subscribers, but only to cover its ongoing costs to operate the game, not nearly enough to earn back what the company invested to create the game.

The title will begin to be meaningfully profitable above 1 million subscribers EA said. At 2 million paying customers, analyst Doug Creutz at Cowen & Co. predicted, EA could make $156 million a year in operating profit.

It will be at least several months, however, before investors will know for sure whether EA's big bet on Star Wars will pay off. That's because a portion of the "active subscribers" haven't yet hit the point where they must pay to continue playing the game online.

In addition, EA is relying on Star Wars: The Old Republic to captivate players for years to come, not just a few months. Its biggest rival, Activision Blizzard Inc.'s World of Warcraft, has operated for more than seven years, peaking in October 2010 with 12 million active subscribers.

However, even Warcraft - -the dominant subscription-based online game -- is beginning to wane in popularity, with the number of subscribers dipping to 10.3 million last October. That creates an opportunity for The Old Republic to scoop up players who are tired of Warcraft, as well as pick up players who are drawn to the Star Wars universe.

In the short term, strong sales of The Old Republic, which retails for about $60 a copy, helped boost EA's December quarter results. The Redwood City, Calif., company posted $1.1 billion in revenue its third quarter ended Dec. 31, roughly flat with a year ago. Net loss narrowed to $205 million, or 62 cents a share, down from a $322-million loss, or 97 cents a share, a year ago.

The flat revenue and losses disguise EA's actual sales because the company has chosen to delay the revenue of games that can be played online over a six-month period. As a result, much of EA's profits from the holiday quarter typically won't hit the company's bottom line until the March and June quarters.